Ross Valley Sanitary District board expected to vote on proposal for $19.2 million bond measure

The Ross Valley Sanitary District board will consider a proposal for issuing a $19.2 million revenue bond when it meets Wednesday night.

The bond would refinance about $11 million in existing district debt and provide $8.2 million for the district to make wastewater system improvements.

In November, the San Francisco Bay Regional Water Quality Control Board notified the district it was violating state law by allowing sewage to overflow into local waterways and failing to allocate adequate resources for repair of its failing pipes. The control board ordered the district board to submit a plan to bring the district into compliance.

A majority vote of the five-member board is needed for the proposal's approval.

"We need to fix the pipes for the water board. We don't have a choice," said district board member Mary Sylla. "Greg Norby, our interim general manager, has done a great job at figuring out how we can refinance so we don't have to have a really dramatic, sudden rate increase."

Sylla said the proposal is much more reasonable than the one that former general manager Brett Richards presented to the board a year ago. At that time, Richards — who was arrested last week in the Philippines on charges of misappropriation of district funds, embezzlement and money laundering — recommended that the board approve as much as $70 million in revenue bonds.

The proposed $19.2 million revenue bond would be repaid over 30 years at an interest rate not to exceed 5.5 percent. The transaction would involve $285,000 in upfront costs and, assuming the bonds sold with an interest rate of 5 percent, would result in the district paying an annual debt service of about $1.2 million. Norby said the district currently pays about $728,000 in debt service.

But district board president Frank Egger said, "I think the board needs more information. The board needs a financial advisor separate from the people who are going to make money selling the bonds."

Board member Pamela Meigs said, "I'm a little bit on the fence."

Meigs said she definitely supports a bond of $9 million to cover the costs of system upgrades; but she has some reservations about spending more to consolidate existing debt.

Norby said issuing the larger bond has several advantages. He said most importantly, it would put the district in a better position if it needs to issue additional bonds in the future to support long-term capital projects.

Sylla said the district board must tell the water quality control board by October what its longer-term plan is for repairing its pipes and how it is going to pay for that work.

The water board has told the district it must come up with a short-term plan for fixing 45 pipe locations, which are most likely to fail first; a longer-term plan for repairing another 800 locations; and a strategy for producing the needed revenue for keeping all 200 miles of the district's pipes in working order.